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March Cablenomics

The fact the 3/4 of the stocks tracked by Cablenomics are up in the last month, even though the big industrial indicators DJIA and S&P500 are down, reflects the strength of this industry. The seemingly insatiable demand for "bandwidth", combined with the removal of Y2K concerns that delayed projects, are possible reasons.

On a more detailed level, the Nasdaq Composite is up because of its strong technology orientation and the number of start-up firms listed on the Nasdaq. It is interesting to note how many stocks are valued based on future expectations, and not necessarily historical earnings. This is a reflection of how the internet can transform an industry Ė and those firms that are well-positioned to benefit from such transformations have stock prices that go well beyond traditional price/earnings ratios.

Another driver of stock prices is mergers & acquisition activities. With stock prices of many larger, publicly-traded companies at record levels, they are more likely to acquire smaller firms, created a "sellers market" in many industries, one of which is the telecommunications/structured cabling field. Small company owners may want to position themselves to capitalize on this situation while the opportunity is high and avoid future competition from larger and potentially more efficient firms.

Interestingly enough, several companies and investment firms are taking advantage of this situation and are increasing their acquisition efforts, especially with contractors/installers/integrators. Many of Gerber & Company, LLCís clients are these firms, who are looking to become part of a larger entity to help them withstand current profit pressures and cash flow issues, address national accounts, while simultaneously providing long-term upside with significantly less risk.

If you are considering selling your firm and are interested in having an initial, exploratory meeting with Gerber & Company, LLC, then you should contact us at your earliest convenience. Ron Gerber, President of Gerber & Company, LLC can be reached at 212-879-6808 (phone) or via email at rgerber@gerbercompany.com.

One of the key topics of interest in every field, especially ours, is the Internet and E-commerce. We have asked several manufacturers, distributors and integrators about their plans for e-commerce. Their response varies by their position in the supply chain, their use of distribution and marketing channels and their individual business strategies. We highlight the results of those interviews in this and future Cablenomics columns.

Please remember however that Cabling Business Magazine and Gerber & Company, LLC cannot be held responsible for any printing errors. Readers should use this article for informative purposes alone. Any investment decisions should be made with the advice of a financial professional.

 

 

Stock Price Table

18-Dec-99

18-Jan-00

14-Feb-00

Cable/Wire Manufacturers

Spectran

SPTR

8.88

8.88

8.97

CDT

CDT

22.00

26.13

26.31

Corning

GLW

112.50

112

180.00

Tyco

TYC

30.00

34.88

38.94

Belden

BWC

18.50

20.25

20.75

Superior Telecom

SUT

14.06

13.44

13.56

General Cable

BGC

6.88

7.00

7.69

Encore

WIRE

6.64

8.50

7.38

Optical Cable

OCCF

19.88

17.38

40.94

Commscope

CTV

41.75

42.44

31.44

Hardware Manufacturers

3Com

COMS

48.75

46.31

67.00

Newbridge

NN

23.56

25.63

33.69

Molex

MOLX

53.13

51.94

53.50

Cabletron

CS

28.50

29.00

37.00

Hubbell

HUB/B

27.44

27.94

25.50

Microtest

MTST

10.69

7.44

12.00

Comm. Systems

CSII

11.88

13.75

17.31

Cisco

CSCO

99.60

107.56

130.50

Lucent

LU

80.50

53.38

53.63

Thomas & Betts

TNB

31.00

33.38

25.75

Advanced Electronic

AESP

1.88

2.53

2.56

Distributors

Kent

KNT

22.44

25.19

28.94

Anicom

ANIC

4.19

4.31

8.31

Alltel

AT

85.50

79.38

62.94

Anixter

AXE

21.75

21.06

21.00

Systemax

SYX

8.13

8.38

10.50

Integrators/VARís

MasTec

MTZ

41.84

43.06

50.69

Norstan

NRRD

5.63

5.25

8.13

Datatec

DATC

5.63

7.25

16.13

Pomeroy

PMRY

10.25

15.13

17.69

Argus Holdings

ARGX

13.38

12.88

13.00

Black Box

66.00

64.31

60.13

Stock Market Averages

DJIA

11257

11722

10520

S&P 500

1421

1465

1390

Nasdaq Composite

3753

4064

4419

 

ANICOM

Last month I talked about how e-commerce is changing the relationships between manufacturers and distributors. That is also true for the relationship between distributors and integrators.

Sheila Weathers, Anicomís Director of E-Commerce tells me that Anicom is actively involved in e-commerce. They feel it is necessary to be competitive and in fact some customers, particularly the larger and more demanding larger ones, have indicated it would be a requirement within a few years.

They are currently beta testing e-commerce with their customers in their website (www.Anicom.net). It did required some initial investment for Anicom and so far they have only provided a limited amount of information on their website about their upcoming e-commerce capabilities. Even so, Sheila says that the response is already very positive. It is their goal to have all of their print catalogs on-line by the end of 2000.

Anicom intends to provide a lot of resources to their customers, more than just ordering. It will be possible for authorized users to get their (secure) account information, do order tracking and expediting, view purchase history and other general accounting information. Non-purchasing people could use it as an account management tool or may wish to take advantage of additional services they identify.

On the manufacturing side, the use of e-commerce is also increasing, but progress with their suppliers is slower. Different approaches developed over time range from no e-commerce, to private electronic data interchange, to off the shelf software over the Internet. She believes that the industry needs to agree upon standards to progress beyond the use of proprietary technology.

 

ANIXTER

On January 10 Anixter International announced its new internet-based electronic business offering called eANIXTER. Their announcement (http://www.anixter.com/about/news/d0102p09.htm) describes the offering as "a business-to-business web site that was created specifically for Anixter customers to help them more easily conduct business with the company."

Anixter describes the new site as comprehensive, user friendly, simple and secure. "The Internet is an exciting new way for us to communicate with our customers. This application will enable us to augment the service that our sales organization provides and foster closer relationships with our customers," said Bob Grubbs, Anixter CEO and President.

They are currently piloting eANIXTER in two European countries, Switzerland and Sweden, and plan on worldwide availability in the first half of 2000.

ANIXTER

SKOKIE, Ill., Feb 8 (Reuters) - Communication products distributor Anixter International Inc. (NYSE:AXE - news) said on Tuesday its sales and operating profit rose for the fourth quarter despite a decrease in sales volume of its data cabling products due to customers' year-2000 transition concerns.

Anixter also said it expects its data cabling business and its service provider business to contribute to North American revenue growth of between 9 and 12 percent in 2000.

The company said its income from continuing operations rose 133 percent to $13.3 million or 36 cents a diluted share from $5.7 million or 13 cents a diluted share last year. The 1999 fourth quarter result excludes a $1.8 million after-tax restructuring charge in Latin America, and the comparative number in 1998 excludes a $2.5 million after-tax restructuring charge primarily in Europe.

Analysts' consensus estimate was 32 cents a share according to a survey by First Call/Thomson Financial, which tracks such data.

Shares of Anixter rose 1/16 at 21-11/16 on the New York Stock Exchange in midday trade.

Anixter's sales for the quarter ended Dec. 31 rose 21 percent to $706 million from $584.5 million.

The company said its revenues from data cabling products decreased in the fourth quarter due to customers' deferral of projects as they prepared for the year-2000 transition.

But Anixter added that the volume shortfall was offset by continued strong growth in sales to service provider customers, which include Internet service providers, cable companies and wireless communication providers in North America.

BLACK BOX

PITTSBURGH--(BUSINESS WIRE)--Feb. 7, 2000--Black Box Corporation (Nasdaq:BBOX - news) today announced a merger with K&A Communications, Inc. Established in 1986 in St. Louis, Missouri, privately-held K&A Communications provides technical design, installation and maintenance services for premise cabling and related products to customers throughout the greater St. Louis region. Annual revenues of K&A are approximately $4 million.

Commenting on the merger, Fred C. Young, Chief Executive Officer of Black Box Corporation, stated, ``K&A is an excellent addition to our national roll-out strategy. They are a highly technical, well-managed and very profitable organization. We welcome K&A to Black Box.''

Richard C. Callison, Sr., President and owner of K&A, said, ``We are very excited about becoming a part of the Black Box family. The partnership with Black Box will give our customers not only the highest quality of installation services, but also top of the line products and excellent technical assistance.'' Mr. Callison will continue to serve as President of K&A Communications.

This transaction is being accounted for as a purchase. The purchase price has not been disclosed.

Black Box is a leading worldwide technical service provider of computer communications and networking services and related products to businesses of all sizes, operating in 77 countries throughout the world.

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